The Kenyan Shilling has remained stable as demand for the US dollar declines, easing pressure on the local currency.
According to Reuters, Kenya’s shilling remained unchanged on Thursday, April 3, supported by low importer demand for the dollar, traders said.
At 08:30 GMT (11:30 EAT), commercial banks quoted the shilling at 129.00/50, the same as Wednesday’s closing rate.
The reduced demand for dollars, mainly from importers, has contributed to the shilling’s steady performance in the foreign exchange market.
This trend could be attributed to lower import activity, increased foreign exchange inflows, or interventions by the Central Bank of Kenya (CBK).
Kenyan Shilling Remains Stable as Importer Dollar Demand Drops
According to data from CBK, the Kenyan shilling traded at Ksh 129.43 against the US dollar on Thursday, April 3.
Meanwhile, it was valued at Ksh 169.2339 against the British pound and Ksh 141.5043 against the euro.
Against regional currencies, the shilling stood at Ksh 28.2176 per Ugandan shilling, Ksh 20.4263 per Tanzanian shilling, and Ksh 10.9108 per Rwandan franc.
The Japanese yen traded at Ksh 87.87 per 100 yen, while the South African rand stood at Ksh 6.384.
Also Read: The Two Sides of Strong Kenya Shilling
On Wednesday, April 2, the Kenyan shilling remained stable, with importer demand for dollars matched by supply, traders said, as reported by Reuters.
At 10: 28 EAT, commercial banks quoted the shilling at 129.00/129.50 per dollar, the same as Tuesday’s closing level.
This strengthening of the shilling means exporters are losing as each USD is exchanged for less Ksh. Importers are winners as they need less Ksh to buy one USD.
The Government is a winner as the foreign public debt repayment costs have fallen drastically, as it needs less Ksh to buy USD to service multilateral and bilateral concession loans, liability management for commercial Eurobonds and syndicated loans.
The CBK Governor Kamau Thugge has in the past attributed the Kenyan shilling’s stability to remittances amid muted foreign exchange demand.
Also Read: Kenyan Shilling to Weaken as Foreign Banks Demand Hard Currency
How Remittances Make Shilling Stable
Diaspora remittances have been key in stabilizing the Kenyan shilling, especially last year when the currency had slid beyond the Ksh160 mark against the US dollar.
A decline in remittances could significantly impact the currency’s strength.
“If more foreign exchange comes in, then the exchange rate will tend to appreciate,” Governor Kamau explained. In essence, the more the dollar inflows into the country, the stronger the shilling.
He added, “If less and more goes out, the exchange rate will tend to depreciate.”
This means the shilling tends to weaken when the demand for dollars increases, particularly due to imports like oil.
Remittances from the US contribute the largest share, with January 2025 seeing over Ksh 30 billion sent back home, slightly higher than the Ksh 28.7 billion sent in January 2024 (equivalent to $221 million).
On average, remittances from the US stand at Ksh 26 billion ($200 million) per month, with annual totals surpassing Ksh 300 billion.
In 2024, the total remittance figure from the US reached Ksh 341.7 billion.
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